4 Key Takeaways From Uber’s Earnings Call

After Uber Technologies (UBER) reported mixed first-quarter results sending shares lower in intraday trading Wednesday, executives joined the company’s earnings call to discuss its financial results, future plans for expansion, and partnerships with autonomous vehicle companies that could provide growth opportunities.

Equity Investments Could Continue To Drag on Uber’s Bottom Line

Executives suggested Wednesday that Uber’s equity investments could continue to impact its bottom line in the coming quarters, though underlying operations are still expected to grow, and pointed to other metrics like free cash flow and adjusted earnings before some expenses as other indicators of Uber’s path to consistent profitable growth.

“Our GAAP net income may continue to see swings from quarter-to-quarter due to the large size of equity stakes on our balance sheet,” CEO Dara Khosrowshahi said in prepared remarks released Wednesday morning.

Uber reported a net loss in the first quarter of $654 million, largely due to charges like a $721 million million pre-tax headwind related to “net unrealized losses related to the revaluation of Uber’s equity investments.” The company also had a $527 million charge in the quarter for legal costs and settlements.

However, Uber highlighted on the call that its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was a record-high $1.4 billion, up 82% from the year-ago period as gross bookings rose, and projected continued gross bookings growth in the second quarter.

The Impact of Autonomous Vehicles and Robotaxis

The rise of autonomous vehicles has raised concerns for some investors and analysts wondering if Uber could be negatively impacted if companies like Tesla potentially roll out a competing service once it reveals its robotaxi at an event later this summer that could allow users to book rides directly through Tesla.

However, Khosrowshahi worked to address those concerns on Wednesday’s call, saying that Uber plans to partner with companies both big and small as the autonomous vehicle technology continues to develop. He said the company believes that “it’ll be great for Uber” as the technology has the potential to bring safer rides and lower costs for consumers, which could bring a wider customer base to Uber.

He also said that Uber’s existing systems like its ability to book trips at scale and process payments in a number of countries make the company an attractive partner for the autonomous vehicle companies, or even owners of autonomous vehicles who could make passive income by renting out the cars for Uber trips.

Like any new technology, Khosrowshahi said autonomous vehicles will take time to develop and has regulatory hurdles to clear before it’s adopted at scale, and in that time Uber could see a mix of human drivers and autonomous vehicles.

Opportunities With Instacart Partnership, International Growth

In its quarterly report and prepared remarks from executives, Uber said it is seeing strong growth in a number of international markets, especially in rides to and from airports as travel demand has also increased with pandemic restrictions in the rearview mirror.

“We’re seeing strong traction in key international markets like Japan, Spain, Canada, and France through both new member acquisition and improved member retention,” Khosrowshahi said regarding membership growth for Uber One, the company’s combined subscription service for Uber and Uber Eats.

The company also recently rolled out autonomous delivery robots for Uber Eats customers in Japan, the first international market to get the autonomous service.

The executives spoke about the partnership between Uber Eats and Instacart (CART) the companies announced Tuesday as well, bringing Uber Eats’ network of delivery workers and connections to restaurants to Instacart’s app.

“We’ll be able to reach new consumers who are currently not active on Uber Eats, giving us an opportunity to improve our category position in key areas like the suburbs,” Khosrowshahi said.

Looking Ahead to Next Week’s Annual GO-GET Event

Khosrowshahi and CFO Prashanth Mahendra-Rajah also highlighted company’s annual “GO-GET” event next week on May 15, where Uber is expected to announce new products or features.

In the 2023 event, Uber announced features like family accounts that allowed teenagers to have Uber profiles that parents can monitor, the ability to reserve car seats for Uber rides, and a phone number to call and book a ride, which allows people without smartphones to use Uber without having the app.

Mahendra-Rajah said in Wednesday’s call that the theme of next week’s event will be “Togetherness,” and that it will showcase new products, features, and partnerships.

Uber shares were down 9.1% at $64.02 as of 12:50 p.m. ET Wednesday following the company’s earnings call, though they remained higher for this year, having gained about 4% since the start of 2024.